Division of the Kingdom Fungi into various classes is based on morphology of the mycelium, mode of spore formation and fruiting bodies. Kingdom fungi is divided into 4 classes /divisions/phylum basically:
i) Phycomycetes
ii) Ascomycetes
iii) Basidiomycetes
iv) Deuteromycetes

Phycomycetes
• These are considered as Lower fungi/ Algal fungi.
• Found in aquatic habitats, on decaying woods in moist and damp places; obligate parasites of plants
• Have Aseptate and Coenocytic hypha.
• Both sexual and asexual reproduction occurs
• Asexual reproduction occurs by Zoospore or by Aplanospores. These spores are endogeneously produced in sporangium.
• Sexual reproduction produes Zygospores . Zygospores are formed by fusion of two gametes.
• Phycomycetes is sub-divided into Zygomycetes & Oomycetes.
• Common examples are Mucor , Rhizopus stolonifer (bread mold) and Albugo (parasitic fungi on mustard).

Ascomycetes
• Commonly known as Sac-Fungi, because of production of spores (called Ascospores) in sac-like Asci.
• Fruiting body is Ascocarp.
• Ascomycetes are unicellular, e.g., Yeast(Saccharomyces) or multicellular, e.g., Penicillium.
• Are saprophytic, decomposers, parasitic or COPROPHILUS (growing on dung).
• Mycelium is branched and septate.
• Live with green algae or Cyanobacteria in beneficial symbiotic associations called Lichens. Also form Ectomycorrhizae with plants.
• Asexual spores are Conidia produced exogenously on the special mycelium called Conidiophores, in cluster or long chain. Conidia on germination produce mycelium.
• Sexual spores are Ascospores which are produced endogenously in Asci. These asci are arranged in different types of fruiting bodies called Ascocarps.
• Examples are Aspergillus , Peziza, Claviceps, Morchella (true morel) and Neurospora, . Neurospora is used extensively in biochemical and genetic work. Others like Morels and truffles are edible ascomycetes. Yeast is useful in fermentation and Penicillium produces antibiotics.

Basidiomycetes
• Commonly known as Club Fungi, after basidium, the club-like cells.
• Basidium is a swollen cell at the tip of a specialized hypha, is the characteristic sexual reproductive structure of the club fungi.
• Mycelium is branched and septate.
• Fruiting body is Basidiocarp; club shaped basidium are arranged in basidiocarp. Karyogamy and meiosis take place in the basidium producing four Basidiospores.
• In mushrooms, the basidium form on specialized structures of the basidiocarp known as Gills. The basidium plays the same role in the club fungi as the ascus does in the sac fungi.
• Vegetative reproduction by Fragmentation is common; asexual spores usually not found.
• Examples include Agaricus bisporus (edible Mushroom/White button), Bracket Fungi or Shelf Fungi (important decomposers of wood), Puffballs, Ustilago (Smut) and Puccinia (Rust fungus), Stinkhorns, Bird’s nest fungi
• Grow in soil, on logs and tree stumps and in living plant bodies as parasites, e.g., rusts and smuts

Deuteromycetes
• Known as Imperfect Fungi, because only Vegetative or Asexual Reproduction occurs in these fungi.
• Lacks Sexual Reproduction; whenever perfect sexual stages are discovered in these fungi ,they were often moved to Ascomycetes and Basidiomycetes and out of Deuteromycetes.
• Asexual spores Conidia are produced.
• Mycelium is septate and branched.
• Few members are Saprophytes or Parasites, while a large number of them are Decomposers of litter and help in mineral cycling.
• Examples are Alternaria, Colletotrichum and Trichoderma.